| Dzielski v Essex Ins. Co. |
| 2011 NY Slip Op 09374 [90 AD3d 1493] |
| December 23, 2011 |
| Appellate Division, Fourth Department |
| Mark Dzielski et al., Respondents, v Essex InsuranceCompany, Appellant, et al., Defendant. |
—[*1] Damon Morey LLP, Buffalo (Kathleen M. Reilly of counsel), forplaintiffs-respondents.
Appeal from a judgment (denominated order and judgment) of the Supreme Court, ErieCounty (Diane Y. Devlin, J.), entered November 17, 2010. The judgment, among other things,awarded plaintiffs the sum of $950,000 against defendant Essex Insurance Company.
It is hereby ordered that the judgment so appealed from is modified on the law by reducingthe award of $950,000 to $499,500, plus interest, and as modified the judgment is affirmedwithout costs.
Memorandum: Plaintiffs commenced this action seeking judgment declaring that defendantis obligated to indemnify its insured in the underlying personal injury action commenced byplaintiffs, in which defendant's insured had defaulted. The underlying action arose from injuriessustained by Mark Dzielski (plaintiff) when he fell from the loading dock after exiting the reardoor of a nightclub owned and operated by defendant's insured. On the evening in question,plaintiff had provided sound equipment for a band that performed at the nightclub, and theaccident occurred while plaintiff was carrying equipment from the nightclub to his truck after theconcert had concluded. According to plaintiffs, the accident was caused by defects in the loadingdock. In this action, Supreme Court granted plaintiffs' motion for summary judgment and denieddefendant's cross motion for summary judgment, awarding judgment to plaintiffs in the amountof the default judgment entered against defendant's insured in the underlying action, i.e.,$950,000, together with interest and costs.
Defendant disclaimed coverage to its insured based on a "stage hand" exclusion in thepolicy's "Restaurant, Bar, Tavern, Night Clubs, Fraternal and Social Clubs Endorsement." Thatexclusion provides in relevant part that "[t]he coverage under this policy does not apply to 'bodilyinjury,' . . . or any injury, loss or damage arising out of . . . [i]njury toany entertainer, stage hand, crew, independent contractor, or spectator, patron or customer whoparticipates in or is a part of any athletic event, demonstration, show, competition or contest. . . ." It is axiomatic that, "to 'negate coverage by virtue of an exclusion, an insurermust establish that the exclusion is stated in clear and unmistakable language, is subject to noother reasonable interpretation, and [*2]applies in the particularcase' " (Belt Painting Corp. v TIG Ins. Co., 100 NY2d 377, 383 [2003]). We agree withplaintiffs that the language "participates in or is a part of any . . . show" isambiguous, and that the court properly resolved that ambiguity against the insurer, "particularly[because it is] an exclusionary clause" (Ace Wire & Cable Co. v Aetna Cas. & Sur. Co.,60 NY2d 390, 398 [1983]). Although, as defendant suggests, the policy language may be readbroadly to encompass all persons who performed any tasks in connection with the show,including loading and unloading sound equipment, it may also reasonably be read narrowly toencompass only those persons who actually performed in the show or were injured as a result ofactivities occurring during the show. It is undisputed that the accident occurred after the showhad ended, and we note in particular that the accident was caused by a defect in the premises thatwas wholly unrelated to the show itself. We thus conclude that the court properly determined thatthe exclusion does not apply in this case.
We reject defendant's contention that the inclusion of the phrase "arising out of" in theexclusion mandates the broader interpretation espoused by defendant. Even assuming, arguendo,that the phrase "arising out of" is interpreted as "originating from, incident to, or havingconnection with" (Maroney v New YorkCent. Mut. Fire Ins. Co., 5 NY3d 467, 472 [2005] [internal quotation marks omitted]),we note that coverage is excluded only if an accident originates from, is incident to or hasconnection with a person's "participat[ion]" in a "show." Here, it cannot be said that there is noambiguity concerning whether the accident arose out of plaintiff's participation in a show, whichin fact had ended before the accident occurred.
We further conclude, however, that, pursuant to the insurance policy in question, coveragefor plaintiff's accident is limited to $500,000 per occurrence, with a $500 deductible. Wetherefore modify the judgment by reducing the award from $950,000 to $499,500, plus interestand costs.
All concur except Fahey and Peradotto, JJ., who dissent and vote to reverse in accordancewith the following memorandum.
Fahey and Peradotto, JJ. (dissenting). We respectfully dissent because, in our view, theexclusionary language in the applicable insurance policy is " 'clear and unmistakable. . . , is subject to no other reasonable interpretation, and applies in th[is] particularcase' " (Belt Painting Corp. v TIG Ins. Co., 100 NY2d 377, 383 [2003]). We wouldtherefore deny plaintiffs' motion for summary judgment, grant defendant's cross motion forsummary judgment, and declare that defendant has no obligation to indemnify its insured in theunderlying personal injury action commenced by plaintiffs.
As noted by the majority, the underlying personal injury action arose from injuries sustainedby Mark Dzielski (plaintiff) when he fell from a loading dock after exiting the rear door of anightclub owned and operated by defendant's insured. On the night in question, plaintiff, anindependent contractor, had provided sound reinforcement services, which included setting upsound equipment, for a band that had performed at the nightclub. The accident occurred whileplaintiff was in the process of removing his sound equipment from the nightclub at theconclusion of the show. According to plaintiffs, the accident was caused by the defective natureof the loading dock. Plaintiffs commenced the underlying personal injury action againstdefendant's insured, and the insured defaulted. Thereafter, plaintiffs commenced this actionseeking judgment declaring that defendant is obligated to indemnify its insured in the underlyingaction. Supreme Court granted plaintiffs' motion for summary judgment and denied defendant'scross motion for summary judgment, awarding judgment to plaintiffs in the amount of the defaultjudgment entered against defendant's insured in the underlying action, i.e., $950,000, togetherwith interest and costs.[*3]
"Where the provisions of an insurance contract are clearand unambiguous, the courts should not strain to superimpose an unnatural or unreasonableconstruction" (Maurice Goldman & Sons v Hanover Ins. Co., 80 NY2d 986, 987 [1992]).Here, defendant disclaimed coverage to its insured based on an exclusion in the policy's"Restaurant, Bar, Tavern, Night Clubs, Fraternal and Social Clubs Endorsement." That exclusionprovides in relevant part that "[t]he coverage under this policy does not apply to 'bodily injury,'. . . or any injury, loss or damage arising out of . . .[i]njury to any entertainer, stage hand, crew, independent contractor,or spectator, patron or customer who participates in or is a part of any athletic event,demonstration, show, competition or contest" (emphasis added). The exclusion thusapplies where two conditions are met: (1) the injured party is an entertainer, stage hand, crewmember, independent contractor, spectator, patron or customer who "participates in or is a partof" an athletic event, demonstration, show, competition or contest; and (2) the injury "arises outof" such participation.
Contrary to the conclusion of the majority, we conclude that the language "participates in oris a part of any . . . show" is not ambiguous, and that plaintiff falls squarely withinthat language. As noted above, plaintiff was hired by the band to provide sound reinforcementservices for the show, and thus there is no question that he "participate[d] in or [wa]s a part of"the show on the night of his accident. The majority's conclusion that such clause may "reasonablybe read narrowly to encompass only those persons who actually performed in the show or wereinjured as a result of activities occurring during the show" is not supported by the plain languageof the exclusion. First, if the exclusion was intended to apply only to those persons who "actuallyperformed" in a show, then the language "spectator, patron or customer" in the exclusion wouldbe superfluous. Second, such an interpretation imposes a temporal limitation on the exclusionwhere no such limitation appears therein. Indeed, if defendant had intended to limit the exclusionin that manner, it could have done so explicitly as it did in other provisions of the policy (see Maroney v New York Cent. Mut. FireIns. Co., 5 NY3d 467, 473 [2005]). For example, the policy's medical paymentscoverage provision specifically excludes expenses for bodily injury "[t]o a person injuredwhile taking part in athletics" (emphasis added). Similarly, the policy's "combinationendorsement" excludes expenses for bodily injury or personal injury to any person "whilepracticing for or participating in any event or function of a sporting or athletic nature"(emphasis added). Here, by contrast, the absence of such limiting language in the exclusion inquestion reflects an intent to provide a broad exclusion for all injuries arising from participationin shows or other special events (see Maroney, 5 NY3d at 473).
We further conclude that plaintiff's injury "ar[o]se[ ] out of" his participation in the showwithin the meaning of the exclusion. In the insurance context, the phrase "arising out of" hasbeen broadly interpreted to mean "originating from, incident to, or having connection with"(Maroney, 5 NY3d at 472 [internal quotation marks omitted]; see Regal Constr. Corp. v National UnionFire Ins. Co. of Pittsburgh, PA, 15 NY3d 34, 38 [2010]). Here, plaintiff's accidentoccurred while he was in the process of removing his sound equipment from the nightclub. Theprocess of packing up and removing sound equipment at the conclusion of a show necessarily"originat[es] from, [is] incident to, or ha[s] connection with" the show (Maroney, 5NY3d at 472 [internal quotation marks omitted]). The fact that plaintiff's accident was allegedlycaused by the defective nature of the loading dock rather than any condition of the show itselfdoes not remove plaintiff's injury from the policy exclusion. "[T]he focus of the inquiry 'is not onthe precise cause of the accident but the general nature of the operation in the course of which theinjury was sustained' " (Regal Constr. Corp., 15 NY3d at 38). Indeed, "the phrase 'arisingout of' . . . requires only that there be some causal relationship between the injuryand the risk for which coverage is provided" (Maroney, 5 NY3d at 472), and such acausal relationship clearly exists [*4]here.Present—Scudder, P.J., Centra, Fahey, Peradotto and Lindley, JJ.